production of goods and services

define production

provision of a product or service to satisfy consumer wants and needs

define productivity

output measured against the input used to create it

ways to increase productivity/efficiency

automation

motivate employees

improve training

new technology

inventory control to reduce waste

benefits of increasing productivity/efficiency

less input for same output

lower average costs

less wage costs as less workers needed

can pay higher wages

why do businesses hold inventories

to ensure theres always enough inventory to satisfy consumer demand

define buffer inventory level

inventory held to deal with uncertainty in consumer demand and delivery of supplies

define lean production

techniques used by businesses to cut down on waste and therefore increase efficiency

types of wastes that can occur in production

overproduction

overprocessing

motion

unnecessary inventory

waiting

transportation

defects

benefits of lean production

less storage costs

quicker production

no need to repair/replace defects

better use of equipment

less money tied up in inventories

improved health and safety

define Kaizen

continuous improvement

how is kaizen implemented

small groups of workers discuss problems and possible solutions

eliminating waste (no unnecessary movements etc)

advantages of kaizen

increased productivity

less space needed for production

less work-in-progress

frees up employees

define JIT

reduces or virtually eliminates the need to hold inventories of raw materials or work-in-progress

benefits of JIT

reduces warehouse costs

inventory isn’t damaged when held

money is not tied up in inventories

define cell production

production line is divided into separate, self-contained units. Each part of the finished product is visible as a separate part instead of flow production.

define job production

where a single product is made at a time

advantages of job production

customized products and “one-off” products

meets exact needs of consumer

high quality due to skilled labour (high price)

high motivation due to varied jobs

disadvantages of job production

high wage costs

no economies of scale

slow process

specialized raw materials so higher costs

advantages of batch production

variety of different products can be made

variety in jobs

flexibility in working and production

not affected a lot if machinery breaks down

disadvantages of batch production

high storage costs

machine reset between each batch so time consuming

expensive due to constant movement of work in progress

advantages of flow production

economies of scale

low labour costs = efficiency

low prices

can operate 24/7

no movement of work in progress

disadvantages of flow production

don’t meet exact needs of customers

high capital investment needed

low job satisfaction

high storage costs

whole process stops if machinery breaks down

factors considered to choose production method

nature of product (standardized or customized)

size of the market

nature of demand (eg: large and fairly steady so flow)

size of business (capital costs)

advantages of new technology

higher productivity

boring jobs done by machines so more job satisfaction

better quality products

quicker communication

disadvantages of new technology

rise in unemployment

expensive investment costs

unhappy changes for employees

quickly outdated